FX Wars Episode 3 - The revenge of the AUD (vs CHF)
Updated
As a wise trader once said:
"Trading is a simple game. What makes it so complicated is the presence of the SNB."
In short and simple terms:
I'm buying the AUD against the CHF for a long-term swing trade.
The reasons for this are short and sweet:
- As predicted back in February, Swiss inflation fell below 2% in July.
- As predicted, Swiss inflation fell much faster than the SNB had expected (currently at 1.4%)
- As predicted, the SNB raised interest rates for the last time in June and paused in September
- Tomorrow the SNB will not raise rates, but the market will start to price in possible SNB rate cuts for 2024
- My forecast: 1st rate cut by the SNB in 2024 will be by March or June
- As predicted in this trade idea, the Swiss economy is increasingly weakening and flirting very aggressively with a possible recession, which would seal 2-3 possible rate cuts in 2024
"Trading is a simple game. What makes it so complicated is the presence of the SNB."
In short and simple terms:
I'm buying the AUD against the CHF for a long-term swing trade.
The reasons for this are short and sweet:
- As predicted back in February, Swiss inflation fell below 2% in July.
- As predicted, Swiss inflation fell much faster than the SNB had expected (currently at 1.4%)
- As predicted, the SNB raised interest rates for the last time in June and paused in September
- Tomorrow the SNB will not raise rates, but the market will start to price in possible SNB rate cuts for 2024
- My forecast: 1st rate cut by the SNB in 2024 will be by March or June
- As predicted in this trade idea, the Swiss economy is increasingly weakening and flirting very aggressively with a possible recession, which would seal 2-3 possible rate cuts in 2024
Note
🟢The trade is off to a good start!🟢Already +70 Pips in Profit✅️
Helped by a dovish SNB🏛🇨🇭 I'm pretty positive this trade will has legs from January on.
-> SNB declared their rate hiking cycle has ended, no further hikes are needed.
-> As I said in my previous CHF Short Idea: From next year on the discussion will be when not IF the SNB will first cut rates🟢
Note
🇨🇭📊 You have to be a little cautious with the inflation data from Switzerland over the next two months:-> These will rise slightly, as the higher electricity prices are now having an effect, but rental prices, which are adjusted once a year in Switzerland, will also contribute to an increase.
Note
🟢The end of the year flows into the CHF should be over by now-> The trade has a lot of room to move to the upside from here!🟢
(Of course the Swiss CPI wil be highly watched this week🇨🇭📊)
Note
🇨🇭📊As forecasted the Swiss CPI saw a rise towards 1.7%.📊🔮And as I said the next month will see a rise again this time to 2% or maybe even slightly above🔮📊
-> BUT: This rise will be temporary so the SNB won't act on it.
🏛🇨🇭I see the SNB cutting rates in June 24🟢
The trade will take some more time till the market also gets that the rise in inflation will only be temporary.
🔮Thats the curse of knowing where inflation and the economy is heading, often you have to wait for the market till he understands it.
Note
📊🇦🇺Employment data out of Australia disappointed to a great extent.➡️-64k overall and -100k full-time Jobs is as bad as it can get.
➡️A big blow for all hopes of a further rate hike from the RBA in february and the question is now if we see further hikes in 2024 at all or if this hiking cycle has ended.
📊🇦🇺The Aussie CPI data out on 31. January will be a big factor here, lets see!
Note
🟢The trade continues to oscillate rather sedately and lacks the final push to free it from its range.📊🇦🇺 With the labour market data from Australia next week,
🇨🇭📊 but also the inflation data from Switzerland, this liberation could finally take place ✅️
⚠️📊🔮As predicted two months ago, Swiss inflation will rise towards 2% this time or possibly even slightly above that🔮📊⚠️
Note
🟢This week we are facing two extremely important data points for the AUDCHF with the🏛🇨🇭SNB's interest rate decision and the
📊🇦🇺Employment data from Australia
🏛🇨🇭 The market is expecting the SNB to cut interest rates with a 40% probability, which, if it actually materialises, would give my CADCHF long a decent boost🟢
🇨🇭🔮 But even if they didn't cut rates (60% probability) it wouldn't be a disaster because, as I predicted 4 months ago, the SNB will cut rates in June at the latest✅️
Quote 13 December 2023: "- My forecast: 1st interest rate cut by the SNB in summer 2024 (March or June)"
Note
🏛🇨🇭 And the SNB was actually the first of the G8 central banks to cut interest rates back in March-> the CHF got a good beating💥💥💥 (as expected)
-> great for my AUDCHF Long which is on its way into the promised land of Take Profits✅️
-> 🔮my prophecy from December last year came true🔮
! 🔮But that's not all folks🔮 !
-> 🏛🇨🇭Ich expect the SNB to cut interest rates again in June🔮
-> the CHF train will continue its downwards journey✅️
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